Location of homes a major challenge for governments – top civil servant

Robert Watt: Many homes will be built in Dublin over next 20 years and should be within M50

Choosing where to build half a million new homes over the coming two decades will be the major challenge facing successive governments, according to Robert Watt, the top civil servant at the Department of Public Expenditure.

Mr Watt was speaking at the MacGill summer school in Glenties, Co Donegal.

Many of those homes will be built in Dublin and should be located within the M50, Mr Watt said.

He said that the Department of Public Expenditure believed that increased density in housing and high-rise developments were “absolutely essential” as a solution to the housing shortage and an increasing population.

However, Mr Watt rejected suggestions that there should be “a spending splurge” on infrastructure.

Infrastructure spending

Earlier, Ibec chief economist Feargal O’Brien told the summer school that the State’s healthy fiscal position should fund a huge programme of infrastructure spending.

Mr Watt said that the government should “build up fiscal buffers” with budget surpluses to prepare for an inevitable economic slowdown.

“If we believe there is going to be a shock we should be running surpluses now,” he said.

“Sometimes we give the impression the tooth fairy is going to fund infrastructure,” he said, and while there were funds available at present, “we still have to pay it back.”

“We disagree that the debt is low. It’s €200 billion. It’s about 100 per cent of GNI [Gross National Income],” Mr Watt said.

Tuesday afternoon’s session focused on the need for infrastructure investment.

Mr O’Brien said that research carried out by Ibec showed that rural areas are six times more exposed to Brexit than Dublin.

He identified pressing needs for infrastructure across a range of areas.

Billions of euro would be needed to upgrade water infrastructure in the coming years, Mr O’Brien said.

There is an urgent need for investment in housing, hospitals and schools, he said.

“We are building less than one net new house for every seven new households formed and as a result Ireland is the only country in the developed world where household size is increasing due to overcrowding,” he said.

“Over 60,000 additional school places will be needed over the next four years while 950 prefabs remain in use in our primary and second-level schools.”

Mr O’Brien said that Ireland’s economy was in rude good health and the resources were there for a major programme of infrastructure investment.

“We are in incredibly good shape right now,” he said.

Recent revisions to the measurement of Ireland’s GDP by the Central Statistics Office have “taken things too far”, he said, in reducing the estimate of the size of the economy.

The most important metric is job creation, he said, describing Ireland as “an absolute standout” among EU countries in new employment.

“Our debt is falling like a stone . . . We don’t need to be constrained by our indebtedness” when deciding on infrastructural projects.

The average Irish household, he said, had €1,000 a week in disposable income. “This is an incredibly high income wealthy society,” he said.

Denser developments

The chairman of AIB Richard Pym said that housing was the most pressing need, and he also suggested that denser developments, perhaps including high rise blocks, would be needed in Dublin.

Like other speakers, Mr Pym lamented the advent of Brexit and said that members of the British government seemed “determined to continue adolescence beyond previous age boundaries”.

“Britain wants to leave the EU, leave the single market, leave the customs union, leave the ECJ, control freedom of movement, cease financial contributions and retain the benefits of membership,” he said. “They want to buy something that isn’t for sale and hasn’t even been invented. This just isn’t going to work out well.”